PUBLISHED 13 JUL 2006
Steady as she goes for market, says Standard Bank
Far from a boom or bust scenario, South Africa’s property market has entered a stable phase in which house prices are expected to consolidate at their current, elevated levels.
And this should still imply a reasonable average growth for the year, albeit lower than in the previous fours years, according to the latest Standard Bank Property Report.
The report says the slowdown in the housing market is now clearly entrenched, with a persistent deceleration in the growth of house prices, and that the 6,5 percent year on year growth in house prices in June was the lowest since January 2003.
“This corroborates the slowdown in consumer activity reflected in other indicators such as retail and car sales, which is expected to be aggravated by the moderate rise in interest rates.
“However, South Africa experienced the highest house price growth in the world last year, according to The Economist, and following such rapid growth a slowdown is to be expected, especially in the absence of fresh stimulus.”
The report also notes that other countries such as Australia, the United Kingdom and the United States now also appear to have escaped a rapid decline in house price growth and are instead experiencing gradual slowdowns.
“Two features of this slowdown are noteworthy. First, the domestic slowdown, just like the boom, is not being experienced in the same way across different market segments. Generally, the price growth of luxury houses is slowing down faster, while the more affordable houses are gaining popularity.
“Second, deteriorating prospects for capital gains, alongside a moderation in rental growth, have been reducing the allure of the property market for investors.”